Welcome to another week of forex trading! In today’s FX feature is an update of the GBPUSD pair which I posted back on August 4 (please see my previous blog here). As you can see from its 4-hour chart, the GBPUSD or the Cable has retraced downwards after reaching a 6-month high of 1.5998 on August 4. But despite its recent weakness, I am still bullish on the British pound. At present, the pair is trading just about just above 1.5500. The previous high at 1.5500 plus the uptrend line should be able to prevent the pair from falling further. A bounce off these supports could push the pair back up to 1.5900. A break below 1.5500, on the flip side, could send it down to 1.5100. But with an oversold condition, as indicated in the stochastics, and an intact uptrend line, the pound, in my opinion, has a higher chance of moving north at least in the short term.
On the economic front, the UK’s inflation and retail sales figures are scheduled to be released on August 17 and 19, respectively. Month-over-month CPI in July is seen to be at -0.2% due to weaker consumer spending. Because of this, the year-over-year count is projected to have slowed to 3.1% from 3.2%. July retail sales is also anticipated to have tapered to 0.4% from 0.7%. And according to the data that was published by the British Retail Consortium (BRC), sales in the retail level have indeed weakened as fears over a probable slash in government spending caused the consumers to only spend for their essential needs.
Since a dip in the UK’s inflation and retail sales accounts is already expected, the market has likely priced this. Given this, the pound can just trade in a range-bound fashion unless a worse-than-projected tallies are printed. A surprise upticks in the accounts, on the other hand, can push the pound higher.